An attempt by the Government to make maize flour affordable to the poor was a good gesture. But the project seems to have collapsed even before take off.
The plan to intervene through the National Cereals and Produce Board (NCPB), in collaboration with private millers, to produce subsidised maize has come a cropper. Last week’s announcement that the price of a two kilogramme packet of maize flour had shot up from Sh72 to Sh110 has dealt a big blow to the project. However, the big question remains: Were Agriculture Minister William Ruto and Prime Minister Raila Odinga serious when they pledged affordable flour for the poor and vulnerable groups?
The well-intentioned plan has failed due to several factors: Given the intrigues and power games surrounding maize, the subsidy scheme could have been a conduit to enrich a few. But it could also have been a legitimate plan that failed for other reasons.
NCPB, a central player in the plan, has only a distribution network of 110 outlets. It does not have the capacity, personnel and logistics needed for distribution of the subsidised maize flour.
In addition, if the only difference between the two-tier meals were packaging and every person were free to buy either, there may have been no justification for a different distribution channel for the low priced one.
The capacity of small-scale stockists to buy in bulk from NCPB can be questioned. High transport costs to NCPB outlets could limit business for small traders who sell in the low-income areas given that the price to the consumer is fixed.
The 5kg packet, sold at Sh130, may not be affordable to many households in low-income areas especially those earning less than one dollar a day. Research from Egerton University’s Tegemeo Institute on urban household survey shows that about 90 per cent of households that purchase sifted maize meal actually buy the 2kg packet or 2kg tins, not the ‘subsidised’ 5kg bags.
But, perhaps the bigger question on policy lapses is why the Government subsidised maize flour sourced from NCPB and not grain milled by households in the posho mills? Research findings indicate that up to 33 per cent of urban households eat posho-milled flour, whereas 74 per cent of the rural household relied on posho, not sifted maize meal.
Farmer’s bank
It is unclear what the role of NCPB is in a liberalised market. Perhaps the best option for the Government is to leave the grain market to a willing-buyer, willing-seller scenario and subsidise the consumer directly.
In the long-term, Kenya needs policy options to ensure maize availability, include increasing productivity by reducing cost of production. Farmers should also be given increased access to financing to enable them purchase and use productivity-enhancing inputs. Presently, the Agricultural Finance Corporation is under funded and lacks capacity to play the role of a farmers’ bank.
Players in the financial sector should also design crop insurance products to cushion farmers against unforeseen weather-related and other shocks.
To eliminate distortions in the market; the Government ought to continue playing a regulatory role rather than active participation in the market. The current intervention in the maize sector should have a time-line of when it will end so that a proper signal should be passed to farmers before the planting season begins.
There is also a need for appropriate, co-ordinated trade policies that take into account the domestic supply and demand for maize and its products at any given time. In the short term, the Government needs to allow the private sector (millers) to import maize to bridge the shortfall.
Increasing maize production should be approached from two levels: At the farm level, early and better land preparation, timely planting, use of appropriate varieties, proper use of fertiliser, efficient weeding and improved control of pests and diseases are necessary. At the national level, essential interventions include research and development, boosting agricultural extension, improved rainwater use and increased access to financing.
